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1-Page Summary of The Automatic Millionaire
Overview
Take a moment to look at your current finances. What assets do you have? How much debt are you in? What is your monthly income and cost of living? The first step to improving your finances is understanding what they currently are.
Almost everyone wants to be a millionaire. However, there are many ways of becoming one. You could win the lottery or some popular game show, but that’s not likely. Or you can invent something revolutionary and start your own business.
Will you?
It’s actually easier to become a millionaire than you might think. It involves setting up an automatic savings account that allows you to take money out of your paycheck and put it into savings without even thinking about it. With this method, anyone can set themselves up for a secure future.
Furthermore, with the automatic-millionaire plan, you don’t need to be making a lot of money. As it turns out, all you need to do is make small payments to yourself and commit to them every payday.
In this passage, you’ll learn about the “latte factor”, cash flow, and how to feel rich while your wealth grows.
Big Idea #1: It’s not necessary to have a lot of money to become an automatic millionaire. You just need to save small amounts regularly, and you’ll eventually reach your goal.
You may not think you can become a millionaire if you earn less than $40,000 per year. However, if you use that money wisely, it’ll go far enough to make that possible.
Jim and Sue McIntyre were very successful in their fifties. They had a lot of money, despite never earning more than $40,000 per year. The author was surprised by this because he thought that they would not be able to save much money.
The McIntyres are living proof that the key to success isn’t earning a huge paycheck. It’s managing your money well.
Jim and Sue McIntyre were lucky enough to receive great financial advice from their parents. They could either work for their money or make their money work for them.
The McIntyres wanted to put their money to work, so they came up with a plan that would help them do that. They decided to use 15% of every dollar they earned and set up a system that automatically distributed the funds for them.
They also had a lot of money to put aside, which allowed them to earn compound interest as the years went by.
With that in mind, you’re probably already earning enough to become a millionaire.
Over the past 50 years, stock prices have risen by around 10% every year. This means that if you save $2,000 each year for your retirement from age 20 to 65, you will have over a million dollars when you retire!
It is possible to get rich by saving money. As an example, if you spend $3.50 on a coffee every day, you will end up spending $1,250 per year. If you smoke one pack of cigarettes a day and spend $7 for it every single day, that would add up to around $2,500 per year as well.
If you save $10 a day, and add the interest of 10% annually, in 30 years you would have almost $700,000. In 40 years that number could be over two million dollars.
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So, today is the day to start thinking about how you spend your money on all of those little things. You might be surprised at how much money you have already saved!
Big Idea #2: Always Have Your Money Working for You
We all have certain expenses that we can’t avoid. For example, taxes and rent are unavoidable. However, you can set aside money for yourself before paying those bills.
You should give money to yourself first. You work hard to support your own well-being and the well-being of your family, not other people’s businesses.
